Opinion

Why Japan’s legacy media industry is ripe for disruption

Anthony PlantAs Japan’s well-entrenched traditional media industry is disrupted by changing consumer behaviour, companies with legacy ties are being left increasingly exposed, suggests Anthony Plant in this guest article.

On 7 September, 2013, the IOC announced Japan as the 2020 host of the 32nd Olympiad to the delight and jubilation of 126 million Japanese. The games come with a promise of accelerated growth and fervour, which has eluded Japan for a while owing to deflationary pressures.

Japan, the country which all innovators look to for its technological advancement, is poised to deliver and even exceed the expectations and take the world by storm. Attendees can be sure to meet with facial recognition technology, smartcards, language apps and dynamic maps to travel the city, and many more innovations which only Japan is capable of, including driverless cars.

The bold statement was made by the Japanese Prime Minister, Shinzo Abe at the annual meeting of the Science and Technology in Society (STS) Forum in October 2015, where he urged scientists and technologists to build “innovative ecosystems”. Calling on “magicians” to “captivate the world”, he quoted Arthur C. Clarke, well-known for the 2001 film: A Space Odyssey, stating: “Any advanced technology gets strikingly similar to magic.”

From the launch of the Shinkansen bullet train, only 10 days ahead of the ’64 Olympiad, one thing is certain: the Games are set to become a Launchpad; a grand showcase of sorts for the next generation advancement in technology which will be the envy of other countries and one which is sure to build Japan’s post-game legacy in innovation and technology.

But on the other side of this sophisticated and technologically-advanced consumer culture is the highly entrenched legacy media structure (TV, print and radio) holding back the advertising and marketing industry.

Foreign agencies often face a stiff competition against domestic agencies that control the market and are virtually competition-free. TV remains the number one media category and the legacy agencies hold exclusive access to media and celebrities.

Creativity is often expressed culturally, not conceptually which has helped shape the intrinsic Japanese culture and created an environment of insularity. And while consumers are exposed to the cutting edge of technology on one hand, when it comes to media, brands and agencies are expected to toe the line for the fear of disrupting the Japanese way of life.

Yet, amid this rather old-fashioned method of media and content consumption, there is a sea-change being seen, predominantly driven by digital and mobile. The country, which is the third largest economy after behemoths US and China, is also the world’s fourth largest in internet population with 73.6m users and home to a 102m strong mobile audience who are spending more time engaged with the internet content (source: ComScore). This trend is leading to not only more ad dollars being assigned to digital and mobile but also bringing disruptive changes to the legacy media space.

According to Magna Global’s annual ad spend report, in 2015 in Japan, mobile advertising across digital formats increased by 37% to represent 44% of total digital media ad sales and digital media ad sales grew by 11% to reach JPY 915bn or 21% market share. Another report by eMarketer suggests that just as recently as 2014, only a third of digital ad spend went towards mobile. This year, that number is projected to be half, and by 2020, the number will touch nearly three-quarters of all digital ad spend.

Another report by eMarketer states that mobile video streaming in Japan is at an all-time high with more than 80% watching digital video. In a separate report, ComScore suggests Japanese web users spend double the time on entertainment sites over regional and global audiences with YouTube and Nico Video leading the category in terms of users and engagement. While YouTube leads the market in unique visitors, Nicovideo stands out in usage time. Gaming – an all-time favourite Smartphone content has seen high levels of engagement with 92% of respondents reporting they played every day.

Japan is also home to the most lucrative app market in the world and Japanese consumers typically have a range of apps, with most installing over a dozen, predominantly for social networking and chats. While Facebook and Twitter have room for growth in Japan, Line is the dominant form of social media in Japan. The messaging app is used for private messages, sharing pictures, exchanging stickers, paid games, music etc.

On the other hand, the cost of producing original content for television media is also proving to be deterrent and increasingly social media is becoming a platform for branded videos in Japan. According to a research by Unruly, branded social videos in Japan saw a 57.1% increase in the year ending October 2015.

So, what does this all mean for Japanese media? And what does it mean for its legacy system? Quite simply, it indicates a tidal change being brought by digital media consumption and device ownership that will see Japan’s media space enter an unparalleled period of change leaving companies adhering to the legacy system vulnerable.

As all eyes are set on Japan and the country prepares to stage an impressive show of scientific innovation come 24 July, 2020, the Olympics Games may just prove to be the disruptive force that will mark the beginning of this new era. The question is, are you ready for it?

Anthony Plant is CEO of IPG Mediabrands Japan

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